Think you will retire on £42,000 a year? That’ll be £1m up front...

There is a gap between the amount people expect to receive during retirement and the amount they have put in (Source: Getty)

Britain's workers are chronically unprepared for retirement, a new report by one of the UK’s biggest life insurers reveals today, with just seven per cent putting in enough money to meet their expectations.

The research, conducted by Watermelon on behalf of Aegon, found a vast gap between the amount of money people expect to receive during retirement and the amount they have to put in. With the average annual income people expect to retire on increasing from £35,000 to £42,000 over the past 12 months the report points out this would require a savings pot of £1m. This sum is higher than the new pension lifetime allowance.

But despite people’s unrealistic expectation of what they will get, the report also found almost two thirds of individuals surveyed do not feel confident about being able to retire when they want to. A further 41 per cent do not knowing how much they are paying in.